Is Outsourcing Services Under Threat from the New World Order?

Is Outsourcing Services Under Threat from the New World Order?

Since the new millennium, the global outsourcing industry has grown by leaps and bounds. The availability of the Internet in 2000 further established globalization. Meanwhile, events were changing the world as we knew it. Over the last 15 years, political, economic and social barriers were torn down as consequences of globalization.

While uncertainty and economic volatility create the ideal conditions for outsourcing to thrive in, it may seem that the process is under threat by the changing political climate.

In 2013, the Philippines became the number 1 destination for global outsourcing supplanting India, Mumbai and Bangalore. Since 2004, the Philippines’ outsourcing services industry has been growing at an average of 20% per annum. From $3M in 2004, the Philippines outsourcing services sector generated US$18M in 2015. It is expected to earn US$20M to US$25M in 2016 with the upside at US$48M by 2020.

These numbers are now at risk since President Rodrigo Duterte came into power in 2016. President Duterte’s administration has taken a 180 degree turn in foreign policy away from the US and toward China, a perennial competitor in outsourcing. According to outsourcing analysts, millions of dollars worth of business from the US and Europe have been put on indefinite hold.

A few months later, in 9 November 2016, America elected Donald J. Trump as its 45th President. During his campaign, Trump vowed to bring jobs back to America by imposing stiff penalties on companies that did business with other countries. Trump’s vitriol was primarily targeted on Asia which was the focal point of the Democratic Party’s foreign policy.

Will these changes in political structures and ideologies signal the end of outsourcing?

The answer is “No” for the following reasons:

Outsourcing Does Not Live or Die with the US – The US is not the only market for outsourcing. Other countries such as Australia, Poland, the United Kingdom, South Korea, Singapore and Germany are emerging markets for outsourcing.

Even if Duterte’s incendiary rhetoric turns off US investors, there are countries that look beyond politics and focus on the availability of talent, comparative advantages and economies of scale.

Offshoring is NOT Outsourcing – The source of Trump’s consternation is offshoring not outsourcing.

In his first 100 days, Trump plans to discontinue the Offshoring Act which allowed US companies to set up shop in other countries to lower their cost of production.

Trump wants to discourage offshoring because it takes jobs away from America. Outsourcing does not take jobs from America.

Outsourcing is a Process – Did your business just sign up a Virtual Assistant? If so, guess what? You just outsourced services.

Outsourcing has been a go-to cost cutting strategy since the 1970’s. It is more prevalent now because the Internet has made it possible to do business with other countries without climbing aboard a plane.

You can outsource services from the comforts of your own home. Need a Content Writer to manage your blogs? Sign up a freelancer from the Philippines.

Do you want to outsource the payroll and benefits management for your 300 employees? Outsource them to a third party service provider who can provide you 10 encoders and 1 Account Manager to do the job.

Globalization is a beautiful thing. Any President who tries to suppress it will be doomed to fail because globalization is the new economy. Instead of fighting it, you should embrace it and all the possibilities.

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